March 2008 Edition

an executive view

Manufacturers shift strategies to thrive in a world that's flat

As they head further into 2008, manufacturers are anxiously wondering what lies ahead.

With a record number of news stories during last year focused on recalled products, raw material shortages, and industry consolidation, the list of challenges grew a little longer these past 12 months. Manufacturers continue to see an impact on their entire business model as the world shrinks and flattens, and centers of manufacturing activity shift to new locations.

How can manufacturers prepare for the uncertainties of the future while becoming even more agile?

"Manufacturing companies are forced to shift their strategy across the board in order to thrive in our flat world," says Ben Langlinais, EDS director of global manufacturing industry solutions. "Agility and the need for an adaptive enterprise will remain a top priority for manufacturers around the globe."

EDS boasts a significant industry-based IT knowledge in the aerospace and defense, automotive, high-tech and industrial manufacturing segments, with more than 30 years of experience working with manufacturers. More than 25,000 EDS employees serve over 220 manufacturing clients in 40 countries.

With accelerated globalization to tap emerging markets for new sources of revenue and benefit from low-cost regions for production capacity, manufacturers are experiencing an increased risk level in their supply chain, product development, the creation and management of new alliances, and their global workforce management.

EDS predicts that these major trends will influence companies in 2008:

• Global integration and collaboration. With accelerated globalization to tap emerging markets for new sources of revenue and benefit from low-cost regions for production capacity, manufacturers are experiencing an increased risk level in their supply chain, product development, the creation and management of new alliances, and their global workforce management.
• Moving beyond lean. In addition to the continued focus on lean, challenges such as shorter product cycles, increased customer demands, the pursuit of lower-cost locations, and the race to new markets all require that manufacturers move toward an agile and adaptive enterprise while creating a new culture of flexibility.
• Going green. Growing demand for natural resources including oil, steel, and resin have created a new generation of environmentally conscious customers that are demanding greener products. These concerned consumers are forcing manufacturers to change their design, production processes, and product mix.
• Regulatory pressures. Government and industry regulations, including environment, safety, corporate governance, and product performance, are being enforced with different standards around the world. Different standards have created a new criticality for data tracking, including a need to collect and report more information and an increased tracking of products.
• Proliferation of electronic/digital content. The continued increase of electronic or digital content in products is creating a new level of security concerns and product sophistication, while simultaneously causing skill shortages and a demand for new competencies.
• Product commoditization. While customers want products they feel are customized to their own unique needs, the pressure on cost and quality continues to increase. Products are becoming commoditized at a much faster pace because of growing consumerism, forcing manufacturers toward demand-driven manufacturing.
• Service focus. The shift from a product to a service focus is forcing manufacturers to gain real-time market insight by working closely with customers. While client service remains a priority, manufacturers have a need to collaborate with customers in addition to their existing supply chain.

Convergence of business and technology. While outsourcing of non-core processes continues to grow, the focus will shift toward tighter alignment of business and technology. Innovative use of information and integrated manufacturing enterprise will be key to gain a competitive advantage.

EDS

What do you think?
Will the information in this article increase efficiency or save time, money, or effort? Let us know by e-mail from our website at www.ToolingandProduction.com or e-mail the editor at dseeds@nelsonpub.com.